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How Healthcare Providers Might Commit Fraud

Healthcare in the United States is incredibly complex. That’s true when it comes to healthcare policies, laws, regulations and insurance. But it’s also true at the local level of the provider – consider all the different people that a patient sees when they need care: general practitioners, nurses, staff members, specialists and pharmacists.

Healthcare is also a very large industry in the United States, particularly when it comes to money. Compared to other nations, our country spends a great deal of money on healthcare. Payment, too, is complex. It often involves patients, employers, insurers, doctors, hospitals, medical supply companies and several other entities.

These two factors – complexity and large amounts of money – make healthcare ripe for fraud. There are so many opportunities for people to exploit the system and so much money floating around that accounting for every single dollar is a nearly impossible task.

Most providers do their best to go by the book and accurately account for the services, equipment and medicine they give patients. But some providers take advantage of the system, and their exploits cost us all billions of dollars every year in the form of fraud. Let’s look at some of the ways providers can commit healthcare fraud.

Billing

One of the primary way healthcare fraudsters game the system is through fraudulent billing practices. This includes billing for services and items that were never given or were unnecessary. Upcoding is a common form of fraud in which providers list common procedural technology (CPT) codes that don’t match with the services provided.

Unbundling is another type of fraudulent billing. Unbundling occurs when several services are supposed to be lumped together in payment but providers bill them as separate services. For example, if a person is injured and the provider performs several tests or procedures at the same time relating to that injury, there are often protocols stating providers should include all those procedures into one code. Unbundling means that they instead list each procedure separately, which means higher payments from the insurer and greater profits for the provider.

Misrepresentation

Misrepresentation means falsely listing the services provided, misrepresenting the person offering the services or misrepresenting the location where services were provided. A provider might claim that a more expensive procedure was performed. A facility could claim that a service was provided by a qualified doctor when it was performed by an unlicensed or unqualified professional. A provider might also list that a patient visited the provider several days a week to receive treatments when they actually visited less frequently and the rest of the treatments were administered by the patient at their own home.

Kickbacks

People sometimes think of kickbacks as an exchange of referrals for money, and that is certainly one example of a kickback. But kickbacks go well beyond cash payments. Technically, kickbacks occur when two parties collude to make referrals or sell services to patients in exchange for anything – not just cash. Exchanging referrals between two professionals or facilities might be considered kickbacks, especially if the patient doesn’t truly need the services being referred.

Healthcare Fraud Can Be Large or Small

Some healthcare schemes involve several different providers, sometimes with several different types of fraud. For example, a network of facilities in a state might conspire to refer services to each other and simultaneously misrepresent or falsely bill patients and insurers. However, not all fraud schemes include a large conspiracy. In some cases, a single provider might occasionally fudge billing codes to boost their profits.

All types of fraud, no matter how big or small, contribute to the problem in our healthcare system.

Healthcare in the United States is a $2.7 trillion industry. The truth is that healthcare fraud is so rampant in our system that no one knows exactly how much it costs us. Conservative estimates total the cost of fraud at around $82 billion a year, while higher estimates range up to $272 billion a year. Medicaid alone experiences around $60 billion in fraud annually.

In many case of fraud, providers aren’t necessarily sitting around and plotting ways to game the system. People who commit crimes often justify their actions through their own logistical twists, and often fraudulent healthcare providers are no different. For example, providers might tell themselves that the system is so complex that they shouldn’t be expected to comply with the coding system without the occasional mistake. While mistakes can be forgiven, fraud represents a deliberate attempt to mislead for profit, regardless of the justification by fraudulent providers.

The Importance of Whistleblowers

It usually takes someone from the outside of the scheme to come forward about fraud, such as an investigator or employee of the facility that identifies the wrongdoing and reports it to the authorities. That’s why whistleblowers play a huge role in identifying and preventing healthcare fraud. Whistleblowers are often people that worked for or with fraudulent providers and have first-hand knowledge of the wrongdoing.

Using the False Claims Act, whistleblowers can report fraud and file claims on behalf of the government through qui tam suits. If their claim is successful, a whistleblower will receive a portion of the recovery, generally between 15 to 30 percent. Since healthcare fraud often involves a significant amount of money, these recoveries can be substantial.

In the fiscal year of 2016, the Justice Department recovered more than $4.7 billion dollars through the False Claims Act. Over half of that amount came from healthcare fraud cases. Whistleblowers greatly helped the department’s efforts. In FY 2016, whistleblowers were awarded $519 million.

In addition to the incentive for a reward, whistleblowers help end some of the most egregious abuses in our healthcare system. They provide a much-needed public service, saving taxpayers billions of dollars that would have otherwise been lost to fraud, abuse and waste.

If you have witnessed wrongdoing and want to learn more about filing a claim on behalf of the government, contact whistleblower attorney Bert Louthian. He has years of experience in helping whistleblowers with their claims. He has the knowledge and skill to ensure that your claim has the best possible chance of success. Call Bert Louthian at 877-834-3477 or fill out our online contact form to learn more.